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IBM Earnings Preview: Strong and Steady?

Wednesday, 16 Apr 2008 | 1:30 PM ET

IBM (IBM)

Huge player in the computer space. Sells and services mainframes, servers and data storage products. Also makes computer chips and writes software. Dow Component.

Reports Q1 earnings Wednesday 4/16 at approx. 4p ET. Conference call at 430p ET.

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WHAT WILL MOVE THE STOCK:

MULTINATIONAL - Keep an eye on benefits from the weak dollar and insulation from U.S. economic woes. Where is the sales growth? Any there any unusual jumps or declines in specific regions?

SERVICE - The lion's share of IBM's sales are computer services. JPMorgan notes that service sales don't weaken until an economic slowdown has already started. JPMorgan says services sales should be OK this quarter, but sees a possible slow down in three to six months. Did IBM's services backlog grow this quarter?

HARD STUFF - How are sales doing for IBM's new servers and mainframes?

UPWARD REVISIONS... - Since January, the vast majority of estimate revisions have been to the upside. On Monday, Goldman Sachs bumped its EPS forecast up to $1.46 from $1.43 and raised its share price target to $130 from $120.

...BUT NO WHISPER NUMBER - Both starmine.com and whispernumber.com say IBM's earnings should come in right in line with the consensus estimate of $1.45.

GUIDANCE - On Feb. 26th, IBM said full-year 2008 earnings would be more than $8.25 a share. Is IBM still on track to meet this goal?

SECOND OPINION ON IBM - If you want another take on what to expect from Big Blue's quarterly results, check out CNBC Technology reporter Jim Goldman's blog on IBM.

ESTIMATES:

Q1 Estimates: EPS up 20% to $1.45, revenues up 8% to $23.711 billion

Q2 Estimates: EPS up 17% to $1.75, revenues up 7% to $25.320 billion

FY 08 Estimates: EPS up 16% to $8.25, revenues up 6% to $104.760 billion

Source: Thomson Financial

Year-ago actuals: Q1 EPS $1.21, Rev. $22.029 billion

FACTOIDS:

ON A TEAR - IBM shares are up more than 17% since the company last reported earnings on Jan. 16th. For the year, IBM shares are up 10%.

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